Economy · Budget & tax · 18 October 2026
NIESR says devolved governments face difficult 2027-28
National Institute of Economic and Social Research has published an analysis stating that all three devolved administrations face a difficult 2027-28. The text explains how UK Budget decisions reach these governments through the Barnett formula.
National Institute of Economic and Social Research has published an analysis of how UK Budget decisions impact devolved governments. The report notes that all three administrations face a difficult financial outlook for 2027-28. Funding for these governments is mainly set at UK spending reviews, which fix departmental budgets for several years.
The UK government is scheduled to deliver its Budget on 28 October. The Barnett formula converts these UK spending plans into a block grant for each devolved administration. It allocates new funding as an equal amount per head rather than an equal percentage increase. Wales receives at least 105 per cent of its population share of new UK spending to slow the erosion of per-head funding. Northern Ireland currently receives 124 per cent of its population share of new UK spending.
Figures published with the announcement show that in 2024-25, UK government departments accounted for 39 per cent of identifiable public service expenditure in Wales. In Scotland, this share was 30 per cent, while in Northern Ireland it was 5 per cent. Health and schools are devolved in all three nations, but policing and justice are devolved only in Scotland and Northern Ireland.
The analysis does not state specific limits or conditions beyond the structural mechanics of the Barnett formula described. It clarifies that the formula operates by allocating an equal amount per head, not an equal percentage increase. The report identifies the specific percentage shares for Wales and Northern Ireland relative to their population share of new UK spending.
Written by StreetOwl from National Institute of Economic and Social Research, a think tank’s own announcement. It was drafted by StreetOwl’s own model, every figure and quotation was checked by code against the announcement, and it was read and approved by Michael Rossi before it went up. It says what was announced, not what anyone should do about it.
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